Consider the following regarding -Tax Buoyancy-1- A tax is buoyant when revenues increase by more than 1 per cent for a 1 per cent increase in GDP-2- After the FRBM act- both direct and indirect taxes remained buoyant-Which of the above statements is-are correct-

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Standard XII

Economics

Primary Deficit & Revenue Deficit

Consider the ...

Question

Consider the following regarding ‘Tax Buoyancy’:
Which of the above statement(s) is/are correct?

Only 1

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Only 2

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Both 1 and 2

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None of these

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Solution

The correct option is A Only 1

A tax is buoyant when revenues increase by more than 1 per cent for a 1 per cent increase in GDP.

After the FRBM act, both direct and indirect taxes remained buoyant except in the crisis years (2008-09 and 2009-10). But in 2011-12, the tax buoyancy declined sharply in corporate tax sector because high level of inflation decreased the actual profits of corporate sector.

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Consider the following regarding ‘Tax Buoyancy’: Which of the above statement(s) is/are correct?

Consider the following regarding ‘Tax Buoyancy’:
Which of the above statement(s) is/are correct?